Friday 2 December 2011

Sozo Global looks to better year ahead

KUALA LUMPUR: Sozo Global Ltd, which specialises in producing convenience foods, is expecting a better year ahead following flattish third quarter earnings. This is on the back of its recent capital expansion, which will help the group to secure a more constant supply of its chief raw material, duck meat.

“Sozo’s performance for the third quarter is within expectations as duck meat continues to be scarce. This will only be a short-term effect however, as our plans to control the supply of duck meat through our own farm will come into effect by the second quarter of next year,” said Sozo CEO Shen Hengbao.

During 3Q, the group invested some 181.4 million yuan (RM90.5 million) that covered the acquisition of seven parcels of land and construction costs for new facilities. These comprise modern poultry farming and breeding facilities, which will help to bring down the group’s raw material costs.

For 3QFY11, the group only saw a slight year-on-year increase in its net profit to RM29.1 million from RM28.2 million a year ago, while revenue from the period in review declined slightly to RM110.5 million from RM110.9 million.

For the nine months ended September, Sozo posted a net profit of RM90 million on the back of RM313 million in revenue.

Despite the worries over supply, Shen said the company is expected to show growth in the current quarter as the year wraps up.

“Despite the scarcity of duck meat and optimum utilisation of the existing capacities, we are optimistic about our growth in FY11. We are confident that with our expansion plans in place for duck farming in Rizhao and [our] halal plant in Malaysia, we should expect greater growth for next year,” Shen said.


This article appeared in The Edge Financial Daily, December 2, 2011.



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